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January 10, 2011

Prudential Investments Unveils Q Shares for Group Retirement Plans

New shares designed to meet government rules for greater fee transparency

Prudential Investments announced Wednesday, Jan. 5 the launch of a “Q Share” class for mutual funds designed to meet the greater fee transparency needs of group retirement plans as they comply with new government regulations.

The shares do not charge 12b-1 service fees and have minimal transfer agency fees, allowing plan providers and sponsors flexibility in choosing pricing structures, according to a release from Prudential Investments, which is the mutual fund family of Prudential Financial Inc., which had approximately $750 billion of assets under management as of Sept. 30, 2010.

As plan providers deal with the implementation of new government rules for greater fee transparency, Prudential Investments is introducing the Q Share class for certain funds to help them fulfill that responsibility to plan participants, said Michael Rosenberg, head of Prudential Investments’ Investment Only Defined Contribution group.

“Investors should view the Q Share class as an opportunity to have a clear accounting of the impact various fees and expenses will have on their accounts by distinguishing between recordkeeping and investment expenses,” Rosenberg said in a statement.

A plan’s financial intermediary or record keeper will have the option to offer Class Q shares for eligible funds. Plans that decide to offer these shares may convert current holdings in another share class of a Prudential fund to the fund’s Class Q shares. Eligible plans include 401(k) and 403(b) plans, Keoghs, profit-sharing pension plans and IRA plans among others.

In other Prudential fund news, the Board of Trustees of The Target Portfolio Trust announced Dec. 10 a redemption of all shares of the firm’s U.S. government money market portfolio. The board “determined that it was in the best interest of the portfolio’s shareholders for the portfolio to cease operations” in voting to redeem the shares, according to a release.

Under the proposal, shareholders of the portfolio will receive payments equivalent to the net asset value of their shares as of the redemption date. The redemption is scheduled to take place on or about Feb.15, and payments will be sent to shareholders “as soon as practicable.”

Similarly, the Board of Trustees of Prudential Investment Portfolios 11 announced Dec. 6 that it was in the best interest of shareholders for the Prudential Government Securities Money Market Fund to cease operations. The board has approved a proposal to redeem all of the outstanding shares of the fund. Under the proposal, shareholders will receive payments equivalent to the net asset value of their shares as of the redemption date, scheduled to take place on or about May 3.

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